Erste Bank JPMorgan Merrill Lynch International

data processing support, (iv) cross-border services to corporate customers, (v) management of
financial assets with the support of the Group’s own capital investment company (Ringturm
KAG) and (vi) the transfer of specialized know-how to individual Group companies. The Vienna
Insurance Group believes that this approach provides its Group companies with the necessary
flexibility to optimally adapt themselves to local market conditions, enabling the Group to better
attain its strategic goals.
Diversification. The Group aims to keep risks low over the long-term through broad diversification
in all areas. This is accomplished through geographic diversification and the various
distribution channels of the Group, which currently operates in 23 countries. As a consequence,
a deterioration in the insurance industry environment in one market will have only a limited
effect on the Group as a whole. The Group’s multi-brand strategy enables it to address various
target groups and use various distribution channels in individual countries. The Group seeks a
balanced ratio of life to non-life businesses and of retail to corporate businesses in each of the
individual markets in which it operates.
In addition, the Vienna Insurance Group sets mid- and short-term financial targets for the Group.
The most important of these targets for the years from 2008 through 2011 assuming completion of the
acquisition of all Target Companies include:
achieving gross written premiums of more than EUR 12.0 billion in 2011;
achieving earnings before taxes in 2011 of approximately EUR 1.05 billion;
maintaining a net-combined ratio in the property and casualty insurance segment of under
100%;
dividend payments of at least 30% of the net profit; and
achieving return on equity (RoE) before taxes of approximately 20% in 2011.
All financial targets have been set on the assumption of the acquisition of the Target Companies
and the disposition of UNITA and a substantial interest of BA-CA Versicherung without taking into
account the proceeds from the capital increase in connection with this Offering and excluding any
other acquisitions. These are financial targets and not forecasts, predictions or guarantees. Management
believes that these targets are reasonable under present market conditions and assuming the
acquisition of all Target Companies can be completed as, and in the timeframe, currently contemplated.
However, the Vienna Insurance Group cannot guarantee that it can attain these targets. Many
factors over which it has no influence could have a negative impact on its ability to attain these
targets. For a description of these factors, see “General Information – Forward-Looking Statements”.
The Companies of the Vienna Insurance Group
Austria
In Austria, the Vienna Insurance Group currently includes Wiener Städtische AG, DONAU
Versicherung AG Vienna Insurance Group (“DONAU”) (approximately 89% interest), and BA-CA
Versicherung AG (60.5% interest). At the end of March 2008, Wiener Städtische AG announced that it
had agreed to sell 50.5% of its 60.5% interest in BA-CA Versicherung to ERGO International AG. For
more information, see “Acquisition of the Target Companies and Long-Term General Distribution
Agreement – Disposition of Assets in Connection with the Acquisition”.
Wiener Städtische AG is an operating insurance company as well as the parent company of the
Group. DONAU operates in the property and life insurance business throughout Austria. BA-CA
Versicherung operates almost exclusively in the life insurance business but also offers a range of
accident insurance products. It primarily uses the branches of Bank Austria Creditanstalt AG as its
distribution channel.
In addition, the Group has a minority interest of approximately 32.0% in Wüstenrot Versicherung.
The Vienna Insurance Group has a number of domestic and foreign affiliates that supplement the
business of the Group but are not themselves insurance companies. These companies represent
diverse industries, all of which are closely related to the insurance industry. The notes to the fiscal
year 2007 annual financial statements of Wiener Städtische AG, which are included elsewhere in this
Prospectus, contain detailed information on the Group’s structure.
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